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Medicare at a glance
Medicare is the federal health care system that covers about 36 million people age 65 and older, plus 7 million disabled. It has four parts:
Financed by a 2.9 percent payroll tax divided equally between employees and employers.
Financed by beneficiary premiums and federal general revenue. Current monthly premiums are $93.50. Starting this year, individuals whose taxable income is more than $80,000 will pay a higher premium.
Financed by Medicare and beneficiary premiums, which vary among plans.
The plans are private and financed by Medicare and beneficiary premiums, which vary among plans.
-- Larry Lipman
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Home > Medicare Monitor > Archives > 2008 > February
February 2008
Medicare says it could ‘bundle’ dialysis payments
Medicare may change the way it pays kidney dialysis centers for end stage renal disease treatments.
According to a report sent to Congress on Wednesday, Medicare could use a “prospective payment system” that sets a specific bundled price for dialysis care. Currently, Medicare pays about 60 percent of such care through a prospective payment system. But it pays individually for items such as drugs, laboratory services, supplies and blood products.
Rep. Pete Stark, D-Calif., chairman of the Ways and Means health subcommittee, has been pressing for bundled dialysis payments and said the report shows Medicare is ready to make it happen.
“It is critically important that a fully bundled payment system accommodates the individual clinical needs of the patient, and the variance in treatment that may be needed to ensure proper care. It cannot be a ‘one-size-fits-all’ system. It must also include rigorous quality reporting and monitoring. The CMS report makes it clear that this type of flexibility and quality control is attainable within a bundled system.
“None of this will happen tomorrow,” Stark said. “It will take a couple of years to design and implement these changes, but I bet the system could be up and running by 2011. I wouldn’t be surprised to hear calls for delay and other scare tactics generated by those in the industry who make money off of the status quo. Regardless, I will work to enact legislation this year that gets this much-needed payment reform underway.”
“It is critically important that a fully bundled payment system accommodates the individual clinical needs of the patient, and the variance in treatment that may be needed to ensure proper care. It cannot be a ‘one-size-fits-all’ system. It must also include rigorous quality reporting and monitoring. The CMS report makes it clear that this type of flexibility and quality control is attainable within a bundled system.
“None of this will happen tomorrow,” Stark said. “It will take a couple of years to design and implement these changes, but I bet the system could be up and running by 2011. I wouldn’t be surprised to hear calls for delay and other scare tactics generated by those in the industry who make money off of the status quo. Regardless, I will work to enact legislation this year that gets this much-needed payment reform underway.”
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Leavitt: Wanna do a demo?
The expectation is that electronic records will reduce the number of medical errors and improve the quality of care. The project will be open to small- and medium-sized primary care practices.
“Communities have a tremendous opportunity to help transform health care delivery from the local level on up,” Leavitt said. “Broad adoption of interoperable electronic health records has the potential not only to improve the quality of care provided, but also to change the way medicine is practiced and delivered.”
So far, HHS and Medicare officials have met with community leaders in Atlanta, Ga.; Kansas City, Kan.; Cleveland, Ohio; Portland, Maine; and Providence, R.I.
Under the demo program, 1,200 doctors could earn up to $58,000 each over five years or $290,000 per practice. The money would come as incentive and bonus payments depending on how many standardized electronic record functions a practice used.
The Centers for Medicare and Medicaid Services expects to select four communities this year and the remaining eight next year. Once the communities are selected, the agency will then begin working with the doctor groups to recruit them into the project.
“We are looking for communities which have strong ties to primary care physicians and are willing to assist CMS in education activities and the recruitment of physician practices for the demonstration,” said acting CMS Administrator Kerry Weems.
According to the department, eligible communities will include those that:
- Demonstrate active community collaboration with a broad group of stakeholders, including providers and medical professional groups, consumers, health plans, and employers;
- Show private-sector support, with likely probability that similar programs will be implemented among employers or health plans in the region;
- Are geographically large enough to recruit a sufficient number of small- to medium-sized primary-care physician practices, of which 100 will be eligible for incentives and 100 will be control sites; and
- Are not already part of an existing CMS demonstration similar to the electronic records project.
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Lawmakers: Hold off on doctor pay cut
Two Georgia congressman have introduced bipartisan legislation to further delay the impending Medicare pay cut for doctors by 18 months, from July 1 until Jan. 1, 2010.
Reps. Tom Price, a Republican, and David Scott, a Democrat, said the delay would give Congress more time to address the thorny reimbursement issue. The American Medical Association has repeatedly warned that the scheduled pay cuts, which Congress has repeatedly delayed, could jeopardize patients’ access to physicians.
“The current Medicare reimbursement process is fatally flawed,” Price said. “The dangerous pending reimbursement cuts will discourage doctors from participating in Medicare and threaten quality health care for our seniors. We must find a sustainable, long-term solution that ensures Medicare beneficiaries will not continue to be put at risk each year. In the meantime, it is necessary to stop unrealistic payment levels in order to ensure the availability of accessible, quality health care to our nation’s seniors.”
Scott said Congress “needs to address long-term action,” because the formula used in setting doctor pay rates “will only further mandate more fee cuts in the foreseeable future.
“Medicare payments only cover about 65 percent of the actual cost of providing patient services. While I expect doctors to participate in quality improvement measures and invest in health information technology, it doesn’t make sense to further burden physicians with these provisions as they certainly can not bear these additional costs without positive payment updates.”
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Martinez measure sets tougher fraud penalties
Medicare fraud penalties would increase under an amendment passed Thursday by the Senate as part of the Indian Health Care Improvement Act.
The amendment would double the maximum sentence for criminal Medicare fraud from five to 10 years, quadruple the maximum criminal fine to $100,000, and double the maximum civil fine to $20,000 per claim.
Listen to Martinez’s floor comments about the amendment here.
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Republicans: Medicare Advantage saves money
Riding to the defense of the embattled Medicare Advantage program, Republicans on the House Ways and Means Committee have sent out an e-mail claiming that “Medicare Advantage (MA) offers better benefits, at lower costs to beneficiaries, than the traditional fee-for-service Medicare program.”
The e-mail points to a recent study by the nonprofit Kaiser Family Foundation titled “The Value of Extra Benefits Offered by Medicare Advantage Plans in 2006.”
Here’s what the Kaiser folks said about their study: “The report’s analysis confirms that on average Medicare Advantage plans provided extra benefits above what traditional Medicare covers in 2006, but finds the value of extra benefits lower for private fee-for-service plans than for other Medicare Advantage plans.”
Republicans zeroed in on the finding that MA beneficiaries have lower out-of-pocket costs than those enrolled in traditional fee-for-service Medicare.
Specifically, the Republicans noted the study found: “For the sickest beneficiaries, with the highest rates of annual out-of-pocket spending, average out-of-pocket costs in traditional Medicare are at least $6,353. In contrast, these same beneficiaries would have spent just $2,160 in a coordinated care MA plan and just $3,113 in an MA private fee-for-service plan. This means sickest and highest cost beneficiaries stand to save up to 66 percent compared to what they would have spent in traditional Medicare.”
Baucus: Bush’s Medicare budget ‘DOA’
President Bush’s plan to slash Medicare and Medicaid spending by roughly $600 billion over the next decade received a hostile reception Monday from key members of Congress and elderly advocacy groups.
“This administration ought to know that five years’ worth of Medicare and Medicaid cuts totaling $200 billion are dead on arrival with me and with most of the Congress,” said Senate Finance Committee Chairman Max Baucus, D-Mont.
Rep. Pete Stark, D-Calif., chairman of the House Ways and Means’ health subcommittee, which oversees Medicare, said, “This budget again reveals the Republican agenda to starve the Medicare program while protecting the profits of insurance companies. Republicans’ ultimate goal is to privatize Medicare.”
Rep. Frank Pallone, D-N.J., chairman of the House Commerce Committee’s health subcommittee, which oversees Medicaid, called the proposals “cruel cuts that would disproportionately affect seniors, the disabled and low-income children, and therefore should be rejected by Congress.”
Bush’s final budget proposes cutting the growth in Medicare spending by $12.2 billion in the fiscal year that will begin Oct. 1, and $178 billion over five years. He envisions slashing Medicare by $556 billion over 10 years.
Medicaid would be cut by about $18 billion over five years and nearly $47 billion over 10 years.
Most of the Medicare cuts would come from forcing increased competition among health-care providers and by trimming money from teaching hospitals and those that disproportionately care for the poor. The budget envisions a cut of about 10 percent in physician payments but would not trim payments to private Medicare managed-care plans.
Bush noted that for the second year in a row, Medicare’s trustees last year predicted that more than 45 percent of the program’s total budget would come from general tax revenues within the next six years, triggering a requirement that the president propose a plan for bringing the spending level below the threshold. If that threshold is reached, the budget says, Bush would order a 0.4 percent across-the-board reduction in payments to Medicare providers each year the threshold is breached.
David Sloane, AARP’s managing director of government relations, said Bush’s Medicare and Medicaid budget would do little to slow the growth of health-care spending but would “simply be passed along to the American people through higher out-of-pocket costs and potentially fewer services.”
Robert M. Hayes, president of the Medicare Rights Center, said the cuts “would hurt older and disabled Americans and take a wrecking ball to many essential hospitals across the country.”
Barbara Kennelly, of the National Committee to Preserve Social Security and Medicare, called Bush’s plan to slash the Medicare fee-for-service program, but not the private managed-care program, “outrageous and indefensible.”
